ACIT, CHENNAI V. K.Sundaraj, CHENNAI

ITA 955/CHNY/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9905 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 10-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S SRIDHAR
• Assessee Lawyers: P RADHAKRISHNAN IRS
• Keywords: Unexplained investment; Deemed dividend
• Section: 143(3); 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NOS.936, 937, 938, 939, 940, 941 & 942 /MDS/2014 ( / ASSESSMENT YEARS : 2000-01, 2001-02, 2002-03, 2003- 04, 2004-05, 2005-06, 2006-07) SHRI. K. SUNDARARAJ, OLD NO.19, NEW NO.45, GIRIAPPA ROAD, T. NAGAR, CHENNAI 600 017. [PAN: AAYPS 9141A] VS THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I (5), CHENNAI 600 034 ./ I.T.A. NOS. 954, 955/MDS/2014 ( / ASSESSMENT YEARS : 2002-03 & 2004-05) THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I (5), CHENNAI 600 034 . ( %& /APPELLANT) VS SHRI. K. SUNDARARAJ, OLD NO.19, NEW NO.45, GIRIAPPA ROAD, T. NAGAR, CHENNAI 600 017. [PAN: AAYPS 9141A] ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 2 -: /DATE OF HEARING : 26.05.2015. !' /DATE OF PRONOUNCEMENT : 09.07.2015. ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE ASSESSEES APPEALS IN ITA NOS.936 TO 942/MDS/ 2014 ARE DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS)-II, DATED 29.01.2014, FOR THE ABOVE A SSESSMENT YEARS, WHEREIN THE COMMISSIONER OF INCOME TAX (APPEALS) CO NFIRMED THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. THE REVENUES APPEALS IN ITA NOS.954 & 955/MDS/2014 ARE DIRECTED AGAINST COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, DATED 28.02 .2013, WHEREIN THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E PENALTY FOR THE ASSESSMENT YEARS 2002-03 AND 2004-05. 2. THE FACTS RELATING TO THE ASSESSEE ARE THAT THERE W AS A SEARCH U/S.132 OF THE ACT IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 21.09.2005 AND NOTICE U/S.153A WAS ISSU ED. THE ASSESSEE FILED HIS RETURNS OF INCOME PURSUANT TO SEARCH, ADM ITTED INCOME IN ADDITION TO UNDISCLOSED INCOME, INCOME FROM AGRICUL TURAL LANDS OF 12.13 ACRES OWNED BY HIM FOR AGRICULTURAL PURPOSE O NLY. THE I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 3 -: ASSESSMENT WAS COMPLETED U/S.153 R.W.S. 143(3) OF T HE ACT BY MAKING THE FOLLOWING ADDITIONS:- 1. AGRICULTURAL INCOME TREATED AS UNDISCLOSED INCOME. 2. UNEXPLAINED INVESTMENT IN BANK/DEPOSITS IN BANK ACC OUNT. 3. INVESTMENT IN KOILPATTI LAND. 4. INCOME FROM HOUSE PROPERTY. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFIC ER. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNA L. THE TRIBUNAL VIDE ITS ORDER DATED 19.05.2010 IN ITA NO.384/MDS/2 010 SET ASIDE THE ISSUE OF AGRICULTURAL INCOME TO THE FILE OF THE ASS ESSING OFFICER TO RE- DETERMINE AGRICULTURAL INCOME FOR THE ASSESSMENT YE ARS 2000-01 TO 2006-07 BASED ON THE ASSESSMENT ORDER OF ASSESSMENT YEAR 2007- 2008. ACCORDINGLY VIDE ORDER U/S.153 R.W.S. 143(3) R.W.S. 254 OF THE ACT DISALLOWED 20% OF AGRICULTURAL INCOME AND TREAT ED THE SAME AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER D ISALLOWED RENTAL INCOME, UNEXPLAINED INVESTMENT IN BANK, INVESTMENT IN KOILPATTI LAND. THE DETAILS OF ASSESSED INCOME ARE AS FOLLOWS:- ASSESSMENT YEAR ASSESSED INCOME DATE OF ORDER 2000 - 01 G4,73,745/ - 30.12.2011 2001 - 02 G88,37,613 / - 30.12.2011 2002 - 03 G14,23,179/ - 30.12.2011 2003 - 04 G7,43,957/ - 30.12.2011 I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 4 -: 2004 - 05 G29,32,209/ - 30.12.2011 2005 - 06 G5,02,416/ - 30.12.2011 2006 - 07 G25,23,964/ - 30.12.2011 2007 - 08 G10,01,016/ - 30.12.2009 2.1 THE ASSESSING OFFICER IN THE PENALTY ORDER STA TED THE RETURNS OF INCOME WERE FILED BY THE ASSESSEE ONLY, ON CONSEQUE NT TO THE SEARCH CONDUCTED AT THE ASSESSEES PREMISES ON 21.09.2005 AND ON ISSUE OF NOTICE U/S.153A AND THAT BUT FOR THE SEARCH, THE A SSESSEE WOULD NOT HAVE OFFERED ANY INCOME. HENCE, PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED FOR CONCEALMENT OF INCOME AND PENALT Y U/S.271(1)(C) WERE LEVIED. THE DETAILS OF PENALTIES LEVIED ARE A S ASSESSMENT YEAR PENALTY AMOUNT LEVIED DATE OF PENA LTY ORDER 2000 - 01 G47,281/ - 30.03.2010 2001 - 02 G68,303/ - 01.07.2009 2001 - 02 G27,77,737/ - 23.06.2008 2002 - 03 G67,448/ - 30.03.2010 2003 - 04 G6,57,200/ - 19.06.2009 2004 - 05 G2,78,965/ - 19.06.2009 2005 - 06 G4,83,541/ - 30.03.2010 2006 - 07 G6,53,121/ - 30.03.2010 AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS ). 2.2 AGAINST SUSTENANCE OF PENALTY, THE ASSESSEE IS IN A PPEAL BEFORE US FOR THE ASSESSMENT YEARS 2000-01, 2001-02, 2002- 03, 2003-04, I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 5 -: 2004-05, 2005-06 AND 2006-07 AND AGAINST DELETION O F PENALTY, THE REVENUE IS IN APPEAL BEFORE US FOR THE ASSESSMENT Y EARS 2002-03 & 2004-05. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. WE DISCUSS THE ISSUE ASSESSMENT YEAR WISE:- ITA NO.936/MDS/2014 FOR THE ASSESSMENT YEAR 2000-20 01. 4. REGARDING LEVY OF PENALTY IN RESPECT OF TREATING INCOME FROM AGRICULTURE AS INCOME FROM OTHER SOURCES. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER TREATED 20% OF THE TOTAL AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME AS THERE IS NO POSITIVE EVIDENCE TO SUGGEST THAT TH E ASSESSEE EARNED THE SAME FROM ANY UNDISCLOSED SOURCE. ACCORDINGLY, THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT PENA LTY CANNOT BE LEVIED WHERE THE INCOME IS ESTIMATED. HE RELIED ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158, WHEREIN IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENSES IT HAS NOT BEEN ACC EPTED BY THE REVENUE, PENALTY U/S.271(1)(C) OF THE ACT IS NOT AT TRACTED. MERELY MAKING OF THE CLAIM IS NOT SUSTAINABLE IN LAW, BY I TSELF WILL NOT AMOUNT I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 6 -: TO FURNISHING INACCURATE PARTICULARS REGARDING INCO ME OF THE ASSESSEE. HE ALSO RELIED IN THE CASE OF CIT VS. CAFCO SYNDICATE SHIPPING COMPANY, 294 ITR 134, WHEREIN EXPENSES HAVING BEEN RECORDED IN ASSESSEES BOOK, FAILURE TO PRODUCE SUPPORTING VOU CHER BY ITSELF WOULD NOT CONSTITUTE CONCEALMENT ATTRACTING PENALTY U/S.2 71(1) (C) OF THE ACT. FURTHER, HE ALSO RELIED IN THE CASE OF CIT VS. CHENNUPATI TYRES & RUBBER PRODUCT 90 CCH 191 (APHC ) WHEREIN IT WAS HELD THAT WHEN THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME AND THE ASSESSEE HAD AGREED TO OFFER SUNDRY CREDIT WHICH WERE CARRIED FORWARD FROM PREVIOUS YEAR AS INCOME, AS A MEASURE OF PURCHASING PEACE, IMPOSITION OF PENALTY U/S.271(1) (C) OF THE ACT WAS UNJUSTIFIED. HE FURTHER RELIED ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. GEM GRANITES (KAR),CHENNAI IN T.C (APPEAL) NO.504/2009, DATED 12.11.2013 . 4.1. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE INCOME DECLARED BY HIM AS AGRICULTURAL INCOME . THE ASSESSEE FAILED TO ESTABLISH THE ENTIRE AMOUNT EARNED FROM THE AGRICULTURE OPERATION CARRIE D BY THE ASSESSEE, BEING SO, THE ASSESSING OFFICER MADE REASONABLE DIS ALLOWANCE OF 20% AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME AND LEVIED PENALTY. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 7 -: ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE, THE A SSESSEE IS DUTY BOUND TO MAINTAIN AND PRODUCE EVIDENCE THAT WERE CA LLED BY THE ASSESSING OFFICER TO PROVE THAT THE INCOME SHOWN AS AGRICULTURAL INCOME WAS IN FACT DERIVED FROM AGRICULTURAL OPERAT ION. HE FURTHER SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS NOT GE NUINE AND THE PENALTY WAS RIGHTY LEVIED BY THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). HE RE LIED ON THE FOLLOWING JUDGMENTS (1) CIT VS. RAMANUJAM THAMPI, 233 ITR 521 (KER) (2) A.M. SHAH & CO VS. CIT 108 TAXMAN 137 (GUJ) (3) CIT VS. HCIL KALINDEE ARSSPL 37 TAXMAN.COM 347 (DEL) (4) SHARMA ALLOYS (INDIA) LTD. VS ITO 37 TAXMANN.CO M 51 (MAD) IN THIS ASSESSEE CASE, THERE WAS A SEARCH U/S.153A OF THE ACT AND NOTICE WAS ISSUED ON 28.08.2006. CONSEQUENT TO THI S, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT G4 ,04,370/- WHICH INCLUDED AGRICULTURAL INCOME OF G1,84,550/-. WHILE COMPLETING THE ASSESSMENT U/S.153A OF THE ACT, THE ASSESSING OFFIC ER CONSIDERED THE AGRICULTURAL INCOME OF G1,84,550/- AS NON AGRICULTU RAL INCOME AS THE ASSESSEE FAILED TO FURNISH DETAILS WITH REGARD TO E XTENT OF AGRICULTURAL LAND, DETAILS OF CULTIVATION LIKE DOCUMENTS IN SUPP ORT OF PURCHASE OF I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 8 -: SEEDS, FERTILIZERS, PESTICIDES AND PROOF FOR SALE OF AGRICULTURAL PRODUCE. HOWEVER, THE ASSESSEE FURNISHED DETAILS OF LAND, NA TURE OF CROPS WITHOUT FURTHER DETAILS WHICH PROVOKED THE ASSESSIN G OFFICER TO TREAT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AT G1,84,550/- AS INCOME FROM OTHER SOURCES. CONSEQUENT TO THIS, TH E ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) OF THE ACT. IN THIS YE AR, WHILE LEVYING PENALTY THE ASSESSING OFFICER HAS NOT ESTIMATED THE AGRICULTURAL INCOME, THE ASSESSING OFFICER TREATED ENTIRE AGRICU LTURAL INCOME DECLARED AS G1,84,550/- FOR LEVY OF PENALTY U/S.271 (1)(C) OF THE ACT. THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE I N SUPPORT OF THE AGRICULTURAL INCOME. WHENEVER THE ASSESSEE CLAIMED ANY INCOME EXEMPTED FROM TAX, THE ASSESSEE IS LIABLE TO PLACE NECESSARY EVIDENCE TO SHOW THAT INCOME IN FACT IS EXEMPTED FROM TAX. I N THIS CASE, THE ASSESSEE THOUGH DECLARED AN AMOUNT OF G1,84,550/- A S AGRICULTURAL INCOME, AFTER THE TRIBUNAL REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO RE-COMPUTE THE AGRICULTURAL IN COME IN THE LIGHT OF THE ASSESSMENT OF ASSESSEE IN THE ASSESSMENT YEAR 2007-2008 AND 2008-09 VIDE ORDER DATED 19.5.2010 IN ITA NO.384/M DS/2010, THE ASSESSING OFFICER CONSIDERED ONLY 20% OF G1,84,550/ - AS AGRICULTURAL INCOME WHICH WORKED OUT TO G36,910/- AS INCOME OF A SSESSEE. THUS IT MEANS THAT THE ASSESSING OFFICER WAS NOT SURE WHAT THE EXACT INCOME I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 9 -: OF THE ASSESSEE FROM AGRICULTURAL INCOME. IN OTHER WORDS, THE ASSESSING OFFICER HAS ESTIMATED THE AGRICULTURAL IN COME. NOW THE QUESTION BEFORE US IS WHEN THE INCOME WAS ESTIMATED AND ASSESSMENT WAS COMPLETED U/S.153A CONSEQUENT TO SEARCH ACTION, BY TREATING THE AGRICULTURAL INCOME DISCLOSED BY THE ASSESSEE AS NO N AGRICULTURAL INCOME WHICH WAS MADE WITHOUT ANY BASIS OF TENABLE AND ACCEPTABLE EVIDENCE RECOVERED DURING THE COURSE OF SEARCH AND WHICH WAS NOT DISCLOSED BY ASSESSING OFFICER, WHETHER PENALTY COU LD HAVE BEEN LEVIED. IN OUR OPINION, AS THERE IS NO MATERIAL TO SUGGEST ANY UNDISCLOSED INCOME AS SUCH LEVY OF PENALTY CANNOT B E SUSTAINED ON ESTIMATED BASIS. THIS IS NOT NORMAL ASSESSMENT AND ASSESSMENT WAS MADE CONSEQUENT TO SEARCH ACTION AND THAT IS ALSO B Y ESTIMATING PORTION OF THE AGRICULTURAL INCOME AS NON AGRICULTU RAL INCOME. HAD IT BEEN UNDISCLOSED INCOME BASED UPON CONCRETE EVIDEN CE RECOVERED FROM SEARCH ACTION, THEN OUR OPINION WOULD HAVE BEE N DIFFERENT. IN THE PRESENT CASE, THE ESTIMATION OF PORTION OF THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME, CONSEQUENT TO SEARCH CA NNOT BE REASON TO LEVY PENALTY U/S.271(1)(C) OF THE ACT. ACCORDINGLY, WE INCLINED TO DELETE THE PENALTY ON THIS COUNT TREATING PART OF AGRICUL TURAL INCOME DISCLOSED BY THE ASSESSEE AS NON AGRICULTURAL INCOME ON ESTIM ATION BASIS. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO.936/MDS/20 14 IS ALLOWED. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 10 -: 5. ITA NO. 937/MDS/2014, ASSESSMENT YEAR :2001-20 02 IN THIS YEAR, THE ASSESSEE DISCLOSED AGRICULTURAL I NCOME AT G1,94,600/-. THE ASSESSING OFFICER TREATED 20% OF 1 ,94,600/- I.E WORKED OUT AT G38,920/- AS NON AGRICULTURAL INCOME, CONSEQUENT TO ASSESSMENT U/S.153A R.W.S. 143(3) R.W.S 254 OF THE ACT. AS DISCUSSED IN THE EARLIER ASSESSMENT YEAR 2000-2001 IN EARLIE R PARA (SUPRA), PENALTY CANNOT BE LEVIED. WE DELETE THE PENALTY FOR THE ASSESSMENT YEAR 2001-2002 AS DISCUSSED IN PARA 4 AND 4.1. IN T HE RESULT, THE ASSESSEES APPEAL IN ITA NO.937/MDS/2014 IS ALLOWE D. 6 ITA NO.938/MDS/2014, ASSESSMENT YEAR :2002- 03 . THE ASSESSEE DECLARED AGRICULTURAL INCOME OF G2,6 0,420/-. THE ASSESSING OFFICER TREATED 20% OF G2,60,420/- I.E. G52,084/- AS NON AGRICULTURAL INCOME, CONSEQUENT TO ASSESSMENT U/S.1 53A R.WS. 143(3) R.W.S 254 OF THE ACT. AS DISCUSSED IN THE EARLIER ASSESSMENT YEAR 2000-2001 IN PARA 4 AND 4.1(SUPRA), PENALTY CANNOT BE LEVIED. WE DELETE THE PENALTY FOR THE ASSESSMENT YEAR 2002-200 3. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO.938/MDS/2014 IS AL LOWED. 7. ITA NO.954/MDS/2013, ASSESSMENT YEAR 2002-03. THIS APPEAL BY REVENUE, THE ASSESSING OFFICER MADE AN ADDITION I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 11 -: IN RESPECT OF UNEXPLAINED BANK DEPOSITS OF G9,60,00 0/- VIDE ORDER DATED 05.06.2008, AND LEVIED PENALTY OF G2,67,396/- . DURING THE COURSE OF SEARCH, IT WAS FOUND THAT THE ASSESSEE HA S MADE DEPOSITS OF ABOVE AMOUNT IN THE SAVING BANK ACCOUNT NO.1397 WIT H INDIAN OVERSEAS BANK, SANTHOME BRANCH, CHENNAI. THE ASSES SEE WAS NOT ABLE TO EXPLAIN THE SOURCE OF DEPOSITS. HENCE IT W AS TREATED AS INCOME OF THE ASSESSEE AND LEVIED PENALTY U/S.271(1) (C) OF THE ACT. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DE LETED THE PENALTY BY PLACING RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL, 251 ITR 09. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 7.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ANY AMOUNT DEPOSITED IN BANK ACCOUNT OF THE ASSESSEE, THE ASSESSEE HAS TO EXPLAIN THE SOURCE FROM WHICH IT W AS DEPOSITED. IN THE PRESENT CASE, THE ASSESSEE IS NOT ABLE TO EXPLA IN THE DEPOSITS. ACCORDING TO THE ASSESSEE, THE ASSESSEE IS NOT EDUC ATED AND RETURN SUBSEQUENT TO THE SEARCH WAS FILED BY A CHARTERED A CCOUNTANT WHO OBVIOUSLY HAS NOT MADE OUT A PROPER DISCLOSURE. THE INTENTION OF THE ASSESSEE WAS TO MAKE A PROPER DISCLOSURE, COME OUT CLEAN AND PAY THE TAXES. HOWEVER, IT WAS SUBMITTED THAT IT WAS ONLY THE MISTAKE OF THE I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 12 -: CHARTERED ACCOUNTANT AND NOT OF THE ASSESSEE IN PRO PER DISCLOSURE. LATER THE ASSESSEE ACCEPTED FOR THE ADDITION TO PUR CHASE PEACE AND TO AVOID PROLONGED LITIGATION. IN OUR OPINION, THIS C ONTENTION OF THE ASSESSEE IS TOTALLY MISCONCEIVED. IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY WHILE FILING THE RETURN OF INCOME. THE ASSESSEE CANNOT SHIFT HIS RESPONSIBILITY TO ITS CHARTERED AC COUNTANT. FURTHER THE ASSESSEE STATED IT WAS ILL ADVISED BY THE CHARTERED ACCOUNTANT WITHOUT MENTIONING THE NAME OF THE CHARTERED ACCOUNTANT. IT IS NOT BROUGHT ON RECORD WHAT ADVICE WAS GIVEN BY THE CHARTERED AC COUNTANT ON THIS ISSUE. IN OUR OPINION, THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND ALSO NOT GIVEN ANY BONAFIDE EXPLANATION FOR THIS. THIS CASE IS SQUARELY COVERED BY THE JUDGMENT OF SUPREME COUR T IN THE CASE OF MAK DATA (PVT) LTD. VS. CIT 358 ITR 593 , WHEREIN HELD THAT THE ASSESSEE HAD ONLY STATED THAT IT HAD SURREND ERED THE ADDITIONAL SUM OF RS. 40,74,000 TO AVOID LITIGATION , BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TO WARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WIT H THE INCOME-TAX DEPARTMENT. THE STATUTE DID NOT RECOGNIZ E THOSE TYPES OF DEFENCES UNDER EXPLANATION 1 TO SECTION 27 1(1)(C) OF THE ACT. THE SURRENDER OF INCOME IN THIS CASE WA S NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION BY THE ASSESSING OFFICER IN TH E SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. TH E SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESS EE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTI ON OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS IN COME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INC LUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT WAS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS T RUE INCOME. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 13 -: IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN TH E SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCO ME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE ASSESSING OFFICER HAD RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE TRUE PARTICULARS OF INCOME AND WAS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE ACT. THERE WAS NO ILLEGALITY IN THE DEPARTMENT INIT IATING PENALTY PROCEEDINGS HENCE, WE ARE INCLINED TO REVERSE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE THE ORDER OF THE A SSESSING OFFICER IN LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 7.2 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.954/MDS/2013 IS ALLOWED. 8. ITA NO.939/MDS/2014, ASSESSMENT YEAR: 2003 -2004 THE ASSESSEE DECLARED AGRICULTURAL INCOME OF G.4,11 ,350/-. THE ASSESSING OFFICER TREATED 20% OF G4,11,350/- I.E . 82,270/- AS NON AGRICULTURAL INCOME, CONSEQUENT TO ASSESSMENT U/S.1 53A R.WS. 143(3) R.W.S 254 OF THE ACT. AS DISCUSSED IN THE EARLIER ASSESSMENT YEAR 2000-2001 IN EARLIER PARA (SUPRA), PENALTY CANNOT B E LEVIED. WE DELETE THE PENALTY FOR THE ASSESSMENT YEAR 2003-200 4. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO.939/MDS/2014 IS AL LOWED. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 14 -: 9 ITA NO.940/MDS/2014, ASSESSMENT YEAR: 2004-05. IN THIS YEAR, THE PENALTY WAS LEVIED ON THE FOLLOWI NG ADDITIONS:- 1) UNEXPLAINED BANK DEPOSITS OF G18,20,000/-. 2) TREATING AGRICULTURAL INCOME AS NON AGRICULTURAL I NCOME OF G4,45,350/- 3) UNEXPLAINED CASH DEPOSITS OF G4,00,000/- 4) REGARDING UNEXPLAINED BANK DEPOSIT OF G18,20,000/-. SEPARATE PENALTY ORDER WAS PASSED VIDE ORDER DATED 05.06.2008 IMPOSING A PENALTY OF G5,92,794/-. LATER VIDE ORDER DATED 19.06.2009, THE ASSESSING O FFICER CONSIDERED ITEMS IN (2) & (3) OF ABOVE FOR LEVY OF PENALTY U/ S.271(1)(C) . IN OUR OPINION, LEVY OF PENALTY WAS IN RESPECT OF TREATIN G THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME WHICH IS ONLY ON ESTIMATION BASIS. CONSEQUENT TO THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 WHEREIN THE ASSESSING OFFICER CONSIDERED ON LY 20% OF G4,45,350/- AS AGRICULTURAL INCOME AS DISCUSSED IN THE EARLIER PARA IN THE ASSESSMENT YEAR 2002-2003, THE LEVY OF PENALTY IS DELETED. 9.1 REGARDING LEVY OF PENALTY IN RESPECT OF UNEXPL AINED CASH DEPOSITS, THERE WAS NO DISCUSSION ABOUT THIS ISSUE BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER. INSTEAD HE DISCUSSED ABOUT LEVY OF PENALTY IN RESPECT OF UNEXP LAINED BANK DEPOSITS OF G18,20,000/, WHICH IS NOT A SUBJECT MAT TER BEFORE HIM, AS IT WAS NOT CONSIDERED BY THE ASSESSING OFFICER IN HIS PENALTY ORDER DATED I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 15 -: 19.06.2009. ACCORDINGLY, WE DIRECT THE COMMISSIONE R OF INCOME TAX (APPEALS) TO GIVE HIS FINDINGS IN LEVY OF PENALTY IN RESPECT OF UNEXPLAINED CASH DEPOSITS OF G4,00,000/-. THIS APP EAL OF THE ASSESSEE IN ITA NO.940/MDS/2014 FOR THE ASSESSMENT YEAR 2004 -2005 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10 ITA NO.955/MDS/2013, ASSESSMENT YEAR: 2004-05 THIS APPEAL BY REVENUE. IN THIS CASE PENALTY WAS LEVIED FOR UNEXPLAINED DEPOSITS OF G18,20,000/-. THE FACTS AR E SIMILAR AS IN THE ASSESSMENT YEAR 2002-2003. ACCORDINGLY, LEVY OF PEN ALTY U/S.271(1)(C) WAS CONFIRMED AS DISCUSSED IN ITA NO.954/MDS/2013 IN EARLIER PARA FOR THE ASSESSMENT YEAR 2002-03. 10.1 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.955/MDS/2013 IS ALLOWED. 11 ITA NO.941/MDS/2014, ASSESSMENT YEAR 2005-200 6 . IN THE ASSESSMENT YEAR 2005-2006, THE ASSESSING OFF ICER LEVIED PENALTY IN RESPECT OF THE FOLLOWING DISCREPANCIES F OUND DURING THE COURSE OF ASSESSMENT. (I) G4,45,350/- WAS TREATED AS INCOME FROM OTHER SOURCES INSTEAD OF AGRICULTURAL INCOME HAS CLAIMED BY THE ASSESSEE. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 16 -: (II) UNEXPLAINED DEPOSIT IN BANK ACCOUNT OF G9,65,000/- (III) DEEMED DIVIDEND OF G10,00,000/-. IT IS TO BE NOTED THAT PENALTY IN RESPECT OF UNEXPL AINED BANK DEPOSIT WAS PASSED BY THE ASSESSING OFFICER IN SEPARATE ORD ER DATED 16.06.2008. FURTHER, IN PENALTY ORDER DATED 30.03.2 010, HE LEVIED PENALTY IN RESPECT OF OTHER TWO ITEMS AT G4,83,541/ - AS TAX WAS EVADED. 11.1 IN RESPECT OF AGRICULTURAL INCOME, ADDITION WAS REDUCED TO 20% OF G4,45,350/-, I.E G89,070/- WHICH IS ONLY ON ESTI MATION BASIS CONSEQUENT TO ORDER OF THE TRIBUNAL FOR THE ASSESSM ENT YEAR 2007-08 AND 2008-2009 (CITED SUPRA). IN OUR OPINION, SINC E THESE FACTS ARE SIMILAR TO THE ONE ALREADY CONSIDERED IN ASSESSMENT YEAR 2000-01 IN PARA 4 AND 4.1 OF THIS ORDER, ACCORDINGLY LEVY OF P ENALTY ON THIS GROUND IS DELETED. 11.2 REGARDING LEVY OF PENALTY FOR DEEMED DIVIDE ND OF G10,00,000/-, THE ASSESSEE ACCEPTED THE ADDITION IN THE COURSE OF ASSESSMENT PROCEEDINGS AND OFFERED NO EXPLANATION R EGARDING THESE LAPSES. THE ONLY CONTENTION OF THE ASSESSEES COUN SEL IS THAT THIS ADDITION WAS VOLUNTARILY OFFERED TO BUY PEACE AND T O AVOID LITIGATION AND PENALTY CANNOT BE LEVIED. IN OUR OPINION, THIS CANNOT BE A I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 17 -: BONAFIDE EXPLANATION SO AS TO GO OUT OF THE RIGOURS OF PENALTY PROCEEDINGS. AS HELD BY THE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT (SUPRA), THAT PENALTY IS LEVIABLE. IN OUR OPINION, THE ASSESSEE FAILED TO SUBSTANTIATE NON OFFERING OF G10,00,000/- AS INCOME WHICH WAS RECEIVED BY THE ASSESSEE FROM THE COMPANY WHERE THE ASSESSEE IS HAVING SUBSTANTIAL INTEREST. BEING SO, IN THE ABSENCE OF THE EXPLANATION OF THE ASSESSEE, WE ARE NOT IN A PO SITION TO DELETE THE PENALTY. ACCORDINGLY, THE LEVY OF PENALTY ON THIS I SSUE IS CONFIRMED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.9 41/MDS/2014 IS PARTLY ALLOWED. 12. ITA NO.942/MDS/2014, ASSESSMENT YEAR 2006-2007 . IN THIS ASSESSMENT YEAR, THE ASSESSING OFFICER CONS IDERED THE FOLLOWING TWO ITEMS FOR LEVY OF PENALTY U/S.271(1) (C) OF THE ACT. (1) INCOME FROM AGRICULTURAL INCOME CONSIDERED AS INCOM E FROM OTHER SOURCES AT G5,34,420/- (2) DEEMED DIVIDEND OF G13,66,000/- REGARDING AGRICULTURAL INCOME, IT WAS SUSTAINED BY THE ASSESSING OFFICER ONLY 20% OF G5,34,420/- IN VIEW OF THE TRIB UNAL ORDER FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 AS DISCUSSED I N THE EARLIER PARA (SUPRA). IN OUR OPINION, SINCE THESE FACTS ARE SIMILAR TO THE ONE I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 18 -: ALREADY CONSIDERED IN ASSESSMENT YEAR 2000-01 IN PA RA 4 AND 4.1 OF THIS ORDER, ACCORDINGLY LEVY OF PENALTY ON THIS GR OUND IS DELETED. 13. REGARDING LEVY OF PENALTY FOR DEEMED DIVIDEND OF G13,66,000/- IS CONFIRMED AS DISCUSSED IN THE ASSESSMENT YEAR 2 005-06 IN ITA NO.941/MDS/2014. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.942/MDS/2014 IS PARTLY ALLOWED. 14 . IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA N O.936, 937, 938, 939/MDS/2014 ARE ALLOWED AND ITA NOS.940, 941 , 942/MDS/2014 ARE PARTLY ALLOWED AND THE REVENUES APPEALS IN ITA NOS.954 & 955 /MDS/2014 ARE ALLOWED . ORDER PRONOUNCED ON THURSDAY, THE 9 TH DAY OF JULY, 2015, AT CHENNAI. SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ /CHENNAI. %& /DATED:09.07.2015. KV &' () *) /COPY TO: 1. + APPELLANT 2. / RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. )-. / /DR 6. .0 1 /GF. I.T.A.NOS.936 TO 942/MDS/14 & ITA NOS. 954, 955/MDS/2014. :- 19 -: